The logic of political economy, and other papers

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Thk Logic of Political Economy .... 5

Life or Milton 221

Section I. — Value In The Generic Sense

That natural distinction, which takes place from the very beginnings of society, between value as founded upon some serviceable quality in an object too largely diffused to confer any power of purchasing other objects, and value as founded upon some similar quality in an object so limited as to become property, and thus having a power to purchase other objects, has long been familiar to the public ear under the antithetic expressions of " value in use " and " value in exchange'' Who first noticed pointedly a distinction which must always obscurely have been moving in the minds of men, it would now be idle to inquire : such an inquiry would too much resemble that Greek question, — " Who first invented sneezing ? " For my own part, the eldest author, in whom I remember to have traced this distinction formally developed, is Plautus, — contemporary with Hannibal. He, in his " Asinaria," has occasion to introduce a lively scene on a question of prompt payment between Argyrippus, a young man then occupied in sowing wild-oats, and Ccelereta, a prudent woman settled in business on her own account. She is in fact a lena, — which name, however did not bear so horrid a construction under Pagan morals as most justly it does under Christian : and, in that professional character, she is mistress of a young beauty with whom Argyrippus had celebrated a left-handed marriage some time back, which connection he now seeks to renew upon a second contract. But for this a price is asked of sixty guineas. The question which arises between the parties respects the propriety of the household economy for the present going on upon tick, which Argyrippus views as the sublimest of philosophical discoveries ; whilst the lena violently resists it, as a vile, one-sided policy, patronized by all who happened to be buyers, but rejected universally by sellers. The following is the particular passage which concerns the present distinction between value in use and value in exchange : —

Arg. What has become of those sums which in times past I gave you ?

Cml. All spent, sir, — all consumed ; for, believe me, if those moneys still survived, the young woman should be despatched to your house without another word ; once paid in full, I 'm not the woman that would trouble you for a shilling. Look here : — the successions of day and night, water, sunlight, moonlight, all these things I purchase freely without money ; but that heap of things beside, which my establishment requires, those 1 pay for on the old terms of Grecian credit. 1 When I send for a loaf to the baker's, for wine to the vintner's, certainly the articles are delivered; but when ? Why, as soon as those people have touched the cash. Jfow, that same practice is what I in my turn apply to others. My hands have still eyes at their finger-ends: their faith is strong in all money -which actually they see. For- " caution," as you call it — for guaranties — they are nothing : security be d d ; and that 's an old saying.

The latter part of the speech wanders off into the difference between the system of prompt payment on the one hand, and of credit on the other. But the part in italics confines itself to the difference between value in use and value in exchange, — between the class of things valuable which could be had for nothing, and that other class of things valuable which must be paid for ; secondly, which must also be paid for on the spot. The former class is a limited class ; the latter so extensive, that she makes no attempt to enumerate the items: she simply selects two, bread and wine, as representative items, — one of which is the more striking, because it represents a necessity already provided for by nature in the gratuitous article of water.

Here, then, already two centuries before the Christian era, in the second or chief Punic war, is the great distinction brought out into broad daylight between the things useful to man which are too multiplied and diffused to be raised into property, and the things useful to man which are not so multiplied and diffused, but which, being hard to obtain, support the owner in demanding a price for them. Many people fancy that these two ideas never are, nor could be, confounded: and some people fancy, amongst whom was Mr. Malthus, that in the intercourse of real life the word value, or valuable, never is employed at all, rightly or not rightly, in the original sense, as implying mere value in use, but that (except amongst affected or pedantic talkers) this word " value " must always indicate some sort of value in exchange. "We never, therefore, according to Mr. Malthus, use or could use such a phrase as "a valuable friend," or "a valuable doctrine.'' It would be impossible to say that " we ascribed great value to any deliberate judgment of such a judge " ; or that " the friendship of a wise elder brother had proved of the highest value to a young man at Cambridge " ; or that "the written opinion, which we had obtained from Mr. Attorney-General, was eminently valuable.'' Literally, it is terrific to find blank assertions made by men of sense so much in defiance of the truth, and on matters of fact lying so entirely within an ordinary experience. Full fifty times in every month must Mr. Maltbus himself have used the word " value " and " valuable " in this very natural sense, which he denounces as a mere visionary sense, suggested by the existing books. Now, to show by a real and a recent case, how possible it is for a sensible man to use the words value or valuable in this original sense, not merely where a pure generic usefulness is concerned, but even in cases which must forcibly have pointed his attention to the other sense (the exchange sense) of the words, — I cite in a note a striking instance of such a use, 2 from this day's paper (the London Standard) for February 27th, 1843.

Value in use, therefore, is an idea lurking by possibility under the elliptical term " value " quite as naturally, though not so frequently, as the idea of value in exchange. And, in any case of perplexity arising out of the term value employed absolutely, it may be well for the reader to examine closely if some such equivocation does not in reality cause the whole demur. One moment's consideration will convince the student that the second form of value — viz. value in exchange — does not exclude the first form, — value in use ; for, on the contrary, the second form could not exist without presupposing the first. But, in the inverse case, the logic is different : value in use, where it exists antithetically to the other form, not only may but must exclude it.

This leads to another capital distinction : — Value in exchange is an idea constructed by superadding to the original element of serviceableness (or value in use) an accessory element of power [howsoever gained] to command an equivalent. It follows, therefore, that the original element, value in use, may be viewed in two states, — Is*, as totally disengaged from the secondary element; 'idly, as not disengaged from that element, but as necessarily combining with it. In the second state we have seen that it takes the name of "value in exchange." What name does it take in the first state, where it is wholly disengaged from the power of purchasing? Answer — [and let the reader weigh this well] — it takes the name of " wealth."

Mr. Ricardo was the first person who had the sagacity to see, that the idea of wealth was the true polar antagonist to the idea of value in exchange ; and that, without this regulative idea, it is impossible to keep the logic of political economy true to its duties. This doctrine, so essentially novel, he first explained in his celebrated chapter (numbered xviii. in his first edition) which bears for its title, " Value and Riches ; their distinctive Properties." And in the early part of it he remarks most truly, that " many of the errors in political economy have arisen from errors on this subject, from considering an increase of riches and an increase of value as meaning the same thing." But it is singular enough, that even Eicardo did not consciously observe the exact coincidence of riches, under this new limitation of his own, with " value in use." This was an accident likely enough to arise under the absence of any positive occasion for directing his eye to that fact. It was, no doubt, a pure case of inadvertence. 2

But there is the same sort of danger from holding two ideas radically identical to be different, or in opposition to each other, as there is from confounding two ideas radically opposed. Meantime, no chapter in Ricardo's book (with the single exception of the first) has been so much singled out for attack, or for special admiration, 8 as this particular chapter which rectifies the idea of wealth. Even amongst the leading supporters of Ricardo, it will be seen further on, (in the brief commentary upon this eighteenth chapter,) that some have unconsciously surrendered it. Not only have they been unaware of their own revolt, in this particular instance, from that theory which they had professed to adopt; but they have been equally unaware that, simultaneously with the collapse of this doctrine concerning wealth, collapses the entire doctrine of Ricardo concerning value; and if that basis should ever seriously be shaken, all the rest of Ricardo's system, being purely in the nature of a superstructure, must fall into ruins. These questions, however, with respect to the truth of particular doctrines, and their power to resist such assaults as have menaced them, will come forward by degrees, in proportion as their development ripens under our advance. For the present my office is, not to defend them, but to state them, and to trace their logical deduction ; by which word, borrowed from a case strictly analogous in the modern expositions of the civil law, I understand a process such as, by a more learned term, would be called a systematic " genesis " of any complex truth, — the act, namely, of pursuing the growth which gradually carries that truth to its full expansion through all its movements, and showing of each separately how it arose, and in what change or movement of the principal idea, under what necessity supervening at that point, or on the suggestion of what occasional falling in with some other and kindred truth.

I have now traced the generic idea of " value," taken absolutely and without further limitation, into the two subordinate modes of, 1st, Value resting exclusively on a power to serve a purpose ; and, 2d, Of value resting on that power, but combined with the accessory power of commanding an equivalent, — into value which does and value which does not involve the idea of property. The simpler mode of value I have announced to be identical with the Ricardian idea of wealth, and, under that head, it will come round for consideration in its proper place. But the other mode of value — viz. Exchange Value — which is far more important to political economy, being no longer a regulative but a constitutive idea, 4 now steps naturally into the place, standing next in order for investigation ; and I warn the young student that, at this point, he steps forward upon perilous ground, of which every inch is debatable. Here it is that the true struggle takes place, that unavoidable combat between principles originally hostile, which into every subsequent section carries forward its consequences, and which, upon every system past or to come, impresses that determinate character, exposes that determinate tendency or clinamen, eventually decisive of its pretensions.

SECTION H.— VALUE IN EXCHANGE.

What is value in exchange ? What is its foundation ? Most remarkable it seems, that up to a certain point all systems of modern economy answer this question correctly; yet, after passing that point, that all are wrong. In the vast accumulation of books on this subject, English, French, or Italian, (for German books go for nothing here,) I have not met with one which sustains the truth to the end ; whilst, on the other hand, it would be hardly less difficult to point out one which fails at the opening. Verbal inaccuracies might indeed be cited from all; for in an age of hasty reading, and of contempt for the whole machinery of scholastic distinctions, it cannot be expected that authors will spend much energy upon qualities which have ceased to be meritorious, upon nicety of distinction which perishes to the flying reader, or upon a jealous maintenance of consistency, which, unless it were appreciated by severe study, could not benefit the writer. In this way, there arises at once a natural explanation of that carelessness in the mode of exposition which has everywhere disfigured the modern science of political economy. Almost all'writers have agreed substantially, and have rightly agreed, in founding exchangeable value upon two elements, — power in the article valued to meet some natural desire or some casual purpose of man, in the first place, and, in the second place, upon difficulty of attainment. These two elements must meet, must come into combination, before any value in exchange can be established. They constitute the two co-ordinate conditions, of which, where either is absent, no value in the sense of exchange value can arise for a moment. Indeed, it is evident to common sense, that any article whatever, to obtain that artificial sort of value which is meant by exchange value, must begin by offering itself as a means to some desirable purpose; and secondly, that even though possessing incontestably this preliminary advantage, it will never ascend to an exchange value in cases where it can be obtained gratuitously, and without effort, — of which last terms both are necessary as limitations. For often it will happen that some desirable object may be obtained gratuitously; stoop, and you gather it at your feet: but still, because the continued iteration of this stooping exacts a laborious effort, very soon it is found, that to gather for yourself virtually is not gratuitous. In the vast forests of the Canadas, at intervals, wild strawberries may be gratuitously gathered by ship-loads ; yet such is the exhaustion of a stooping posture, and of a labor so monotonous, that everybody is soon glad to resign the service into mercenary hands.

The same idea, the same demand of a twofold conditio sine qua non as essential to the composition of an exchange value, is otherwise expressed (and in a shape better fitted for subsequent reference) by the two following cases, marked Epsilon and Omicron: —

Case Epsilon. — A man comes forward with his overture, " Here is a thing which I wish you to purchase ; it has cost me in labor five guineas, and that is the price I ask." " Very well," you reply ; " but tell me this, what desire or purpose of mine will the article promote?" Epsilon rejoins, "Why, as candor is my infirmity, none at all. But what of that ? Useful or not, the article embodies five guineas' worth of excellent labor." This man, the candid Epsilon, you dismiss.

Case Omicron. — Him. succeeds Omicron, who praises your decisive conduct as to the absurd family of the Epsilons. " That man," he observes, " is weak, — candid, but weak ; for what was the cost in your eyes but so much toil to no effect of real service ? But that is what nobody can say of the article offered by myself; it is serviceable always, — nay, often you will acknowledge it to be indispensable." " What is it ? " you demand. " Why simply, then, it is a pound of water, and as good water as ever you tasted." The scene lies in England, where water bears no value except under that machinery of costly arrangements which delivers it as a permanent and guaranteed succession into the very chambers where it is to be used. Omicron accordingly receives permission to follow the candid Epsilon. Each has offered for sale one element of value out of two, one element in a state of insulation, where it was indispensable for any operative value, i. e. price, to offer the two in combination ; and, without such a combination, it is impossible (neither does any economist deny this by his principles) that value in exchange, under the most romantic or imaginary circumstances, ever should be realized.

Thus far all is right ; all is easy and all is harmonious ; — thus far, no hair-splitter by profession can raise even a verbal quillet against so plain a movement of the understanding, unless it were by some such cavil as is stated below. 5 It is in the next step that a difficulty arises, to all appearance insurmountable. It is a difficulty which seems, when stated, to include a metaphysical impossibility. You are required to do that which, under any statement, seems to exact a contradiction in terms. The demand is absolute and not to be evaded, for realizing an absurdity and extracting a positive existence out of a nonentity or a blank negation. To this next step, therefore, let us now proceed, after warning the reader that even Ricardo has not escaped the snare which is here spread for the understanding ; and that, although a masculine good sense will generally escape in practice from merely logical perplexities, [that is, will cut the knot for all immediate results of practice which it cannot untiej yet that errors " in the first intention " come round upon us in subsequent stages, unless they are met by their proper and commensurate solutions. Logic must be freed by logic : a false dialectical appearance of truth must be put down by the fullest exposure of the absolute and hidden truth, since also it will continually happen, (as it has happened in the present case,) though a plausible sophism, which had been summarily crushed for the mo-, ment by a strong appeal to general good sense upon the absurd consequences arising, will infallibly return upon us when no such startling consequences are at hand. Now, therefore, with this sense of the critical step which next awaits us, let us move forward.

The idea of value in exchange having thus been analytically decomposed, the question which offers itself next in order concerns the subdivision of this idea. How many modes are possible of value in exchange? The general answer is, — two ; and the answer is just : there are two. But how are these two distinguished? How is it that they arise ? Now here it is, in the answer to this question, that an infirm logic has disturbed the truth. Even Ricardo has not escaped the universal error. Suspensory judgments are painful acts. It is fatiguing to most readers, that a provisional view of the truth should be laid before them, upon which all the pains taken to appropriate and master it are by agreement to be finally found worthless. This refutation of error is better so placed as to follow the establishment of the truth, in which position the reader may either dismiss it unread, as a corollary which already he knows to be too much, — as an offshoot in excess ; or, on the other hand, choosing to read it, will do so under the additional light obtained through the true doctrine now restored to its authority.

The difficulty which strikes us all upon the possibility of raising any subdivision under that generic idea of exchange value already stated, is this : — The two elements are, — 1st, Intrinsic utility; 2d, Difficulty of attainment. But these elements must concur. They are not reciprocating or alternating ideas; they are not, to borrow a word from Coleridge, inter-repellent 6 ideas, so that room might be made for a double set of exchange values, by supposing alternately each of the elements to be ■withdrawn, whilst the other element was left paramount. This is impossible; because, by the very terms of the analysis, each element is equally indispensable to the common idea which is the subject of division. Alike in either case, if No 1, or if No 2, should be dropped out of the composition, instantly the whole idea of exchange value falls to the ground like a punctured bladder.

But this seems to preclose the road to any possible subdivision of the generic idea, because immediately it occurs to the student, that when no element can be withdrawn, then it is not possible that the subdivisions can differ except as to degree. In one case of exchange value there might, for instance, be a little more of the element A, and a little less of the element B. In some other case these proportions might be reversed. But all this is nothing. When we subdivide the genus animal, we are able to do so by means of an element not common to the two subdivisions : we assign man as one subdivision,— brutes as the other, — by means of a great differential idea, the idea of rationality; consequential upon which are tears, laughter, and the capacity of religion. AJ1 these we deny to brutes; all these we claim for man ; and thus are these two great sub-genera or species possible. But when all elements are equally present to both of the subdividing ideas, we cannot draw any bisecting line between them. The two ideas he upon one continuous line, — differing, therefore, as higher and lower, by more and by less, but not otherwise ; and any subdividing barrier, wheresoever it is made to fall between them, must be drawn arbitrarily, without any reasonable foundation in real or essential differences.

These considerations are calculated to stagger us ; and at this precise stage of the discussion I request the read-

THE LOGIC OF POLITICAL ECONOMT. 21

er's most vigilant attention. We have all read of secret, doors in great cities, so exquisitely dissembled by art, that in what seemed a barren surface of dead wall, where even the eye forewarned could trace no vestige of a separation or of a line, simply by a simultaneous pressure upon two remote points, suddenly and silently an opening was exposed which revealed a long perspective of retiring columns, — architecture the most elaborate, where all had passed for one blank continuity of dead wall. Not less barren in promise, not less abrupt in its transition, this speculation at the very vestibule of political economy, at the point where most it had appeared to allow of no further advance or passage, suddenly opens and expands before an artifice of logic which almost impresses the feelings as a trick of legerdemain, — not by anything unsound in its own nature, but by the sudden kind of pantomime change which it effects. The demand is, that you shall subdivide exchange value into two separate modes. You are to do this without aid from any new idea that has arisen to vary the general idea ; you are to work with the two already contained in that general idea, — consequently with ideas that must be common to both the subdivisions, — and yet you are to differentiate these subdivisions. Each is to be opposed to the other, each is to differ, and yet the elements assigned to you out of which this difference is to be created are absolutely the same. Who can face such conditions as these ? — Given a total identity, and out of that you are to create a difference.

Let not the reader complain of the copious way in which the difficulty is exposed. After many hundreds of failures, — after endless efforts with endless miscarriages, — it is no time for refusing his own terms to the leader of a final assault. So many defeats have naturally made us all angry. I am angry, — the reader is angry; and that offer is entitled to consideration, even though it should seem needlessly embarrassed or circuitous, which terminates in the one object that can be worth talking about, — viz. in "doing the trick," — and carrying by a summary effort that obstacle which (whether observed or not observed) has so long thwarted the power of perfecting and integrating the theory of value. Once being convinced that it is a mere contradiction to solve the problem, the reader may be relied on for attending to anything offered as a solution by one who has almost demonstrated its impossibility.

Out of nothing, nothing is generated. This is pretty old ontology; and apparently our case at present is of that nature ; for by no Laputan process of extracting sunbeams from cucumbers, does it appear how we can hope, out of two samenesses, to extract one difference ; yet do it we must, or else farewell to the object before us. And, in order that we may do it, let us disembarrass our problem of all superfluous words ; and, by way of sharpening the eye to the point of assault, let us narrow it to the smallest possible area.

"What we have to do, is to consider whether (and now) it is feasible so to use a sameness as to make it do the office of a difference. With one single sameness this would peremptorily not be possible ; for we could vary it no otherwise than by varying its degrees. Now, a difference in degrees is no substantial difference in logic ; and the pretended subdivisions would melt and play into each other, so as to confound the attempt at sustaining any subdivisions at all. But, on the other hand, with two samenesses it is possible to move. A little reflection will show that there is a resource for making them alternately act as differences. In physics we see vast phenomena taking place all day long, which a priori might have been stated as paradoxes not less startling than that of extracting a difference out of a sameness. One gravity rises through another gravity. True ; it is specifically lighter ; but still it has a specific gravity : and thus we find as the result, with the usual astonishing simplicity of nature, that the same machinery serves for sinking objects and for raising them. By gravity they fall; by gravity they rise. So also, again, that same ocean, which to nations populous and developed by civilization offers the main high-road of intercourse, was to the same nations, when feeble, the great wall of separation and protection. And again, in the case before us, monstrous as really is the paradox,' yet it is true, that, by a dexterous management of two elements absolutely identical, all the effects and benefits may be obtained of two elements essentially different.

Let us look more closely. The two elements are u and D. If both elements are to be present, and both are to be operative, then indeed we have a contradiction in terms such as never will be overcome. But how if both be uniformly present, one only being at any time operative ? How if both be indispensably present, but alternately each become inert? How if both act as motives on the buyer for buying at all, but one only (each in turn under its own circumstances) as a force operating on the price ?

This is the real case : this is the true solution ; and thus is a difference obtained, — such a difference as will amply sustain a twofold subdivision from elements substantially the same. Both are co-present, and always. Neither can be absent ; for, if so, then the common idea of exchange value would vanish, the case epsilon or the case omicron would be realized. But each of the two is suspended alternately. Thus, by way of illustration, walk into almost any possible shop, buy the first article you see ; what will determine its price ? In ninety-nine cases of a hundred, simply the element d, — difficulty of attainment. The other element, u, or intrinsic utility, will be perfectly inoperative. Let the thing (measured by its uses) be, for your purposes, worth ten guineas, so that you would rather give ten guineas than lose it ; yet, if the difficulty of producing it be only worth one guinea, one guinea is the price which it will bear. But still not the less, though u is inoperative, can u be supposed absent ? By no possibility ; for, if it had been absent, assuredly you would not have bought the article even at the lowest price : xr acts upon you, though it does not act upon the price. On the other hand, in the hundredth case, we will suppose the circumstances reversed. You are on Lake Superior in a steamboat, making your way to an unsettled region 800 miles ahead of civilization, and consciously with no chance at all of purchasing any luxury whatsoever, little luxury or big luxury, for a space of ten years to come : one fellow-passenger, whom you will part with before sunset, has a powerful musical snuff-box; knowing by experience the power of such a toy over your own feelings, the magic with which at times it lulls your agitations of mind, you are vehemently desirous to purchase it.